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State Agency Lax on Overseas Spending, Report Says

New York’s economic development agency has not properly kept tabs on the representatives that it hires to promote the state’s businesses overseas, according to a new audit by the office of the state comptroller, Thomas P. DiNapoli.

The audit, which will be released on Monday, found that Empire State Development had spent $2.7 million on foreign offices in the 2011 and 2012 fiscal years without paying adequate attention to whether the spending was benefiting New York businesses.

Mr. DiNapoli said in a statement that “improvements and greater consistency in monitoring how taxpayers’ dollars are spent is needed” at Empire State Development.

New York State has representatives in the United Kingdom, Israel and South Africa, with the goal of increasing exports from New York businesses and attracting foreign direct investment in them. The state also had representatives in Australia, Brazil, Canada, Chile, China, Mexico and Turkey, but the Cuomo administration eliminated those offices during a period of budget reductions.

The review by Mr. DiNapoli’s office found that officials at Empire State Development could not produce documentation explaining how or why they selected the international markets in which to invest. They also did not carefully monitor the performance of the representatives to see whether they were meeting the obligations of their contracts, according to the audit.

For instance, in one case, the state’s office in Toronto had projected export sales of $1.2 million, but reported only $175,000 in actual sales. In another case, the state’s office in Turkey reported that it did not generate a single dollar from new exports. The audit described the state’s monitoring of its foreign offices as “informal and ad hoc at best.”

The activity covered by the audit spanned the period from April 2010, nine months before Governor Cuomo took office, until last October. Mr. Rubin joined the Cuomo administration in November 2011, shortly after a brief, turbulent stint as an editor of Bloomberg News’s opinion section; he departed in May to move to London with his wife, the television journalist Christiane Amanpour. Empire State Development said he did not manage the international programs on a day-to-day basis, but advised the Cuomo administration on how they could be improved.

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The agency, which has been a favored ground for patronage appointments by Mr. Cuomo, told the comptroller’s office that before the audit, it had started to put in place a new monitoring system for the state’s representatives abroad.

The audit also found that the agency had “made significant improvements” in its handling of payments to foreign representatives, an area where the comptroller’s office had previously identified problems.

In a written response to a draft of the review, the agency also suggested the comptroller’s office did not appreciate the difficulty of its work.

Ed Hamilton, the senior deputy commissioner for finance and administration, wrote that “international economic and political factors” affected performance of the state’s representatives regardless of how closely they were monitored. He added that “complex cultural matters,” like South Africa having 11 official languages, complicated their work.

Mr. Hamilton also said the comptroller’s office did not adequately recognize its successes. He cited a Long Island manufacturer whose sales in the United Kingdom were said to have doubled thanks to the help of Empire State Development and the state’s office in London, and a paint manufacturer in Israel that decided to open three showrooms in Manhattan and to develop plans for a paint-mixing facility in Long Island City, Queens.

Cuomo administration officials said they inherited a dysfunctional international program and were in the process of redesigning it, including adding industry experts who would focus on increasing exports in the agriculture, manufacturing and high-tech sectors.

A spokeswoman for Mr. Cuomo, Melissa DeRosa, said the administration had “identified ESD International Division’s weaknesses” and “has begun a dramatic overhaul to help New York compete across the globe."

A version of this article appears in print on July 1, 2013, on Page A24 of the New York edition with the headline: State Agency Lax on Overseas Spending, Report Says. Order Reprints|Today's Paper|Subscribe